Posted
by
timothyon Monday December 28, 2009 @07:07AM
from the this-golden-goose-soup-is-delicious dept.

theodp writes "Recalling that CEO Jeff Bezos originally explored placing Amazon.com on an Indian Reservation near San Francisco to 'have access to talent without all the tax consequences,' the NY Times argues it's time to put an end to the e-tailer's 'entity isolation' tax-avoidance games. The LA Times chimes in, saying Amazon's claims that collecting sales tax constitute an undue burden are 'worth a horselaugh,' noting that Amazon boasts it has no problem keeping track of millions of unique products."

if there were no tax heavens anywhere in the world and businesses just paid what they owed like the rest of us. Sure the prices will go up but if this happened from the get go, it wouldn't be an issue.
I'm annoyed with companies avoiding paying tax but then using the government system to seek protections or create laws for their benefit.

Obeying the law is not a loophole. They could add taxes to their site for every specific city, county, state, etc. and send them money, but it would be a donation, not a tax. Until the law gets changed, Amazon is neither abusing a loophole nor doing anything morally objectionable. I think singling Amazon out here on the sales tax thing is really low, it's not something Amazon is specifically in the wrong on, it's something the law is in the wrong on. Hating Amazon for not paying taxes is the same as hating the American public for not pushing for the tax.

There is _nothing_ wrong with avoiding taxes. My God, if we have a right to an attorney to help us avoid jail time, we ought to have a right to avoid spending 1/3rd of our life working for the government.

Well, like everything, to a point. But in Delaware's case, the roads are paved on time, traffic is manageable, public services are good, and things are rolling along. Like, I have to ask, what exactly does New Jersey or Maryland do with all of their dough, because, in both cases, services are worse and the roads are worse.

I think what makes Delaware tick is that you have some genuine bipartisan centrist leadership. Democrats and Republicans alike are not the crazies that are in Washington DC.

Perhaps, I'm not familiar with the tax laws in the various EU countries. I do know that there are many states that have taxes that vary by county. Counties are not easily discernible by zip codes, which makes it very difficult to accurately determine the buyer's location. You can't trust the buyers to do it, either, because if given the option they'll choose the one with the lowest tax.

Add in the fact that each county has different taxes for different items (cigarettes, alchohol, ammo, soft drinks, even junk food in some) and you have yourself a mini nightmare of tax law. Ohio, for example, has 88 counties, all of which tax differently. Not only can these taxes change at any time, it's not unheard of to redraw county lines. You can see where online retailers are going to need an army of tax lawyers to make sense of it all and keep it up to date.

Either way, Amazon probably has the resources to do so, but do all online retailers? I doubt it...

Brick and mortar stores - all of which have to collect and pay sales taxes - also have to pay corporate income taxes. Why should Amazon have such a huge advantage over brick and mortar stores?

Huge advantage? Ever heard of shipping? Bumps the price of the item up about as much as sales tax. In fact, since I live in WA I already have to pay sales tax on my Amazon orders on top of shipping costs. It makes small items cost about 2 or 3 times what they cost in the local Target/Walmart.

And then there are states like New Hampshire [freestateproject.org], with no state sales tax (and no state income tax, either)I guess these dying dinosaur newspapers will concentrate their efforts where governments are largest and extract the most wealth from the serfs.

Reagan did lower taxes...only to raise them again, a year later. Apparently he saw that the deficit grew too large too quickly. However, this part of the Reagan aura is frequently left out by his devoted followers. Even Reagan realized that Reaganomics didn't work. However, tax cuts are popular, and tax increases are unpopular, and thus we find ourselves in the situation we are in now, with trillions of dollars in debt, and the light at the end of the tunnel growing dimmer and dimmer.

There is over a hundred different tax rates in NY state alone. The company I work for has seven different locations in seven different counties. Any one can come to us and buy stuff. However since we do somuch business around the state we have to deal with taxes to the point where one of our accountants (out of three) spends half of her week justkeeping it straight. Failure is expensive. You see when the state audits you they take a sample of errors made and multiply that by the number of years they go back. It doesn't matter if that sample is accurate. So multi million dollar fines are the norm.

If a local company has to hire a person just to manage the problem amazon will have to hire 100. Not that amazon can't but tax law is so complicated lawyers have given up trying to figure it out

* I think Cook County may be the only county in the country that is legally permitted to levy its own sales tax, but I'm not sure.

No, Sangamon County has a sales tax [sj-r.com] as well. Here in Springfield there's the state sales tax, county sales tax, and city sales tax. Oddly, when I buy a $.99 loaf of bread at County market, it comes to an even dollar, so I guess food isn't taxed at the state or city level (not sure why though).

That is, of course, one potential set of jurisdictions for one potential customer. Now multiply that ridiculous level of legal complexity for every possible combination of city, county and state that are applicable and you're quickly arriving at a system of rather ridiculous proportion.

That's what computers are for.

Worthwhile? Not in my mind.

Well, I don't like paying taxes either, but I'd say if they're going to those lengths to dodge taxes and the various governments are fighting so hard to collect them, maybe it is worthwile. I'd rather pay income tax than sales tax, and IMO property tax is downright evil. I knew an elderly couple about 20 years ago who had paid off their house, but its valuation rose so mch that they lost the house over the taxes.

Once I've paid for something it should be mine; nobody should be able to collect any more money for it.

And it can get even stranger. At least in Arizona, your zip code is not an indicator as to the county you live in (not to mention what city). In order to administer collection of sales/use taxes down to the local level (yes, we do have cities that levy sales taxes), you would almost need GPS/GIS information.

If you have a Queen Creek zip code, you might live in Queen Creek, in unincorporated Maricopa county or in unincorporated Pinal county (all at different rates). Which combination of state/county/local sales taxes do you collect?

The same goes for the Pinal/Pima county line (Red Rock and Marana). Once again, one zip code with multiple jurisdictions with different tax rates.

When the politicians say this is an issue of fairness (no sales tax - competitive advantage to online retailers), they somehow miss the other side of the coin. When the brick and mortar stores add handling and delivery charges the online stores should collect sales taxes.

According to this page [monster.com], $50k is closer to a starting salary for NY & LA. (I choose them since it's their papers providing TFA.) If you've been teaching since the 80s and have a master's degree, NYC teachers head towards 6 figures [nyc.gov] pretty quick.

$80k may be more than the average for the majority of districts, but you choose the right one and not only is it totally achievable, there's a pretty good overlap with the state/local governments that tend to have budget issues.

The issue with taxing amazon is quite simple - governments have no business levying taxes outside their jurisdiction. If a citizen of say, California, directs goods to be brought into the state, state law says that individual is responsible for paying use tax, not the merchant from which they purchased said goods.

The music and video shops in your example have a presence in the local jurisdiction and benefit from its services such as roads, social programs, police/fire protection and so on. Amazon doesn't.

I do know that there are many states that have taxes that vary by county.

It's worse than that. In Texas, the sales tax varies by city. There are a few towns/villages in the D/FW area that are literally a few blocks in size.

Either way, Amazon probably has the resources to do so, but do all online retailers? I doubt it...

The last time this subject came up on Slashdot, someone posted a link to an online source for sales tax assessment. I don't know if it used zip+4 or even the specific address.

But, I think the real problem is not how complex it is: it's the penalty if you get even the slightest detail wrong. If Amazon screws up an order and annoys a customer, they might lose a customer. If they make their best effort to collect sales tax and some bureaucrat disagrees, the state can come down on Amazon with the full force of the law.

Given the ambiguities of geopolitical boundaries (disputes are common), I wouldn't want to be in the cross-hairs of an bureaucrat that decides they want to make an example of me.

Traditional brick-and-mortar (and resident mail-order) businesses get a certificate from the state/city/county that specifically spells out the sales taxes they must collect, ideally before they ever make a sale. At least in my state, that's a defense against arbitrary changes after-the-fact.

As others have noted, zip code is woefully inadequate for determining sales tax rates. At best, that company can give a list (from one to a half dozen) of sales tax rates that might apply to those living in that zip code.

Personally, if this needs to be fixed at all, I think states should just set a fixed sales tax rate and mandate all online retailers collect to that level.

..sometimes places with the same postal (ZIP) code have different taxes.

A zip+4 should give enough accuracy to determine by that level.

In my state (Ohio), I live right on a main street that runs through the center of the city.

On the side of the street I live on, there is one tax rate. Across the street is a different tax rate from being in a township, and down maybe 4 blocks or so from where I live on that same street is the same base tax as on my side of the street, PLUS the county tax.

All three of those areas are in the same zip+4.

Another few blocks past there is another zip+4 (BUT note it is the same 5 digit zip still!) that has the first and last taxes in the above description, yet the side of the street is reversed.

If the state, city, and county governments refuse to use ZIP codes or borders on a map, how do you expect us to do it?